Crude oil shipped by railroad from North Dakota is drawing fresh scrutiny from regulators concerned that the cargo is adding environmental and safety hazards, something that analysts say could raise costs.

The U.S. Federal Railroad Administration is investigating whether chemicals used in hydraulic fracturing are corroding rail tank cars and increasing risks. Separately, three pipeline companies including Enbridge Inc. warned regulators that North Dakota oil with too much hydrogen sulfide, which is toxic and flammable, was reaching terminals and putting workers at risk.

Until last month, safety advocates’ chief worry was spills in derailments. After tank cars blew up July 6 on a train in Quebec, investigators in Canada are considering whether the composition of the crude, which normally doesn’t explode, may have played a role in the accident that killed 47 people. The oil was from North Dakota’s Bakken shale…”

North Dakota is the nation’s second-biggest oil-producing state, with more than 790,000 barrels a day this year up from from about 150,000 barrels in 2008. Railroads move 75 percent of the state’s crude, including the load of more than 70 cars that derailed and exploded last month in Lac-Megantic, Quebec.

Much of North Dakota’s production relies on hydraulic fracturing or fracking, a technique in which millions of gallons of chemically treated water and sand are forced underground to shatter rock and free trapped oil. Highly corrosive hydrochloric acid is widely used to extract oil in the state, according to a 2011 report from the Society of Petroleum Engineers…

In June, Enbridge won an emergency order to reject oil with high hydrogen-sulfide levels from its system after telling the Federal Energy Regulatory Commission that it found dangerous levels of the compound at a rail terminal in Berthold, North Dakota. In addition to being highly flammable, hydrogen sulfide in the air is an irritant and a chemical asphyxiant that can alter both oxygen utilization and the central nervous system, according to the U.S. Occupational Safety and Health Administration…

“The fact that there were explosions, and crude oil is not supposed to explode, raises a lot of suspicions as to whether there were other chemicals and so on added to oil in the process before the shipment,” Edward Burkhardt, chief executive officer of Rail World Inc., which owns the Montreal and Maine railway, said in an interview.

BITD, I’ve seen crude light enough to decant straight into a Mercedes diesel taxi and drive home. Even that was difficult to ignite with an open flame and it certainly wasn’t explosive.

I don’t know what the oil companies in North Dakota are using to get this stuff out of the ground – or to get it on stream – but, if pipeline companies are turning down business then that crude is nothing I want to be anywhere next to.